Day Traders Diary

12/20/22

The major averages rose Tuesday as Wall Street shook off a surprise move from the Bank of Japan that sent global bond yields up. Investors also overlooked fears that a year-end rally may not come to pass. The Dow Jones Industrial Average rose 92 points, or 0.28%, to close at 32,849. The S&P 500 gained 3 points to 3,821 while the Nasdaq Composite ticked up a point to 10,547.

Overnight on Tuesday, the Bank of Japan moved to widen its cap on the 10-year Japanese government bond yield, catching traders around the world off guard and sending stock futures down, initially. That added to pressure from other hawkish central banks, with both the European Central Bank and the Federal Reserve raising rates last week.

Stocks recovered later in the day as traders assessed central bank moves and bet that most will either stop hiking rates next year.

"Over 90% of central banks have hiked interest rates this year, making the (mostly) global coordinated effort unprecedented" said Lawrence Gillum, fixed income strategist at LPL Financial. "The good news? We think we're close to the end of these rate hiking cycles, which could lessen the headwind we've seen on global financial markets this year."

Even with Tuesday's gains, stocks are on track to end the week and month in the red. The Dow is down 5.3% month to date, the S&P 500 has shed 6.43% and the Nasdaq has lost more than 8%.

A handful of big companies will report their quarterly results this week ahead of the Christmas holiday. Nike and FedEx are set to report after the bell.

This week promises lots of insight into the housing industry. Sales data for existing homes and new homes will be released Wednesday and Friday, respectively.

November's personal consumption expenditures report, a preferred measure of inflation for the Fed, is due on Friday.

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